India Is A Consistent Leader In Inbound Remittances, But What About The Workers Themselves?

India Is A Consistent Leader In Inbound Remittances, But What About The Workers Themselves?

In these times of fierce anti-immigrant sentiment, it will take time to push for freer movement of economic migrants and service providers

Ajit RanadeUpdated: Monday, May 13, 2024, 09:36 PM IST
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Representative Image | Pixabay

The International Organization for Migration, an agency of the United Nations, released its World Migration Report for 2024. This report, which is rich in data, is released along with many data tools that help researchers, policymakers and media. That data dominates discourse, especially in these times of rising anti-immigrant sentiment across the world. Is migration a human right? The Indian Constitution gives a right to every citizen to move freely to any part of the country. But moving across borders is not the same. The United Nations while not explicitly recognising the right to migrate as a human right, does have the right to leave any country, including your own, as a fundamental right. This might sound contradictory but is not. You have the negative right to not be coerced, or persecuted, and hence can migrate. But you may not have the right to be automatically allowed entry into any other country. Relatedly the UN also recognises the right to seek asylum and the right to not be forced to return to one’s country. These are recognised because of the risk of persecution, torture or serious harm. The UN estimates that during 2022, there were 281 million international migrants representing 3.6% of the world’s population. These include migrants fleeing conflict or persecution, violence, political instability and also those seeking economic opportunities.

Migrating for economic reasons is certainly not a human right. But once an economic migrant is in a foreign country, there are international agreements and laws that seek to protect workers from exploitation and safeguard some basic rights. India’s international economic migrants have a stellar record. For nearly three decades, they have been sending their hard-earned earnings home, making India by far the highest receiver of remittances. During 2022 India received 111 billion dollars which was nearly half of the merchandise trade deficit of the country. It was also more than twice as much as the second and third remittance recipients, Mexico and China.

India’s inward remittances keep growing, having more than doubled since 2010, and showing a growth of 6% plus per year, ahead of GDP growth. By comparison China’s inbound remittances have been falling. Pakistan and Bangladesh get about one-fourth of what India gets. The bulk of India’s inbound remittance comes in from the Gulf states, which are home to blue-collar workers in fields like construction, retail, security, transport and semi-skilled work. More granular data will reveal that the average remittance from a blue-collar worker is a few thousand dollars, which forms a significant portion of his or her income and helps the family back in India. Such remittances face hurdles of high transaction cost — as high as 6% — and also exchange rate risk.

By contrast, India’s outbound remittance has also been growing. Under the Liberalised Remittance Scheme (LRS) of the RBI the latest data shows that it might have crossed 32 billion dollars during 2023-24, with a growth rate of 25% over the previous year. Unlike inbound remittances which come from blue collar workers, the outbound is typically from the rich segment, supporting the education of their children or maintenance costs of loved ones, or buying foreign assets. There is thus a stark divide in the profile of inbound and outbound remitters. It would of course be imprudent to put any restriction on outbound remittances on the suspicion that precious foreign exchange is leaving India. One has to examine the root cause, rather than clamp the outflow in a knee-jerk fashion.

India’s reputation as number one recipient of inward remittance is not without its worrying aspect. On one hand it shows the loyalty and diligence of those remitting money home. It brings some macroeconomic stability to the trade deficit and foreign exchange fluctuations. It is a natural corollary that India is de facto exporting surplus labour. The troubling aspect is that this is relatively low-productivity labour. Should not these labourers have found jobs in India? Is it leading to a dependency syndrome? Kerala used to get 25% of the state’s income from remittances (now reduced to below 20%). That made Kerala one of the richest states in per capita consumption, but it was also a state with notorious labour shortages. Workers have to be imported from northern states like Bihar, Jharkhand and Orissa to make up for the shortfall. The huge influx of Gulf dollars also led to high inflation in the local real estate market in Kerala. So, a strong and unlimited inflow of remittances, whether at the state level (Kerala) or at an all-India level, is a mixed blessing. Unless the remittance money goes into productive investments and in manufacturing and high-tech industries, and instead goes only into real estate, it can cause long-term problems. For India, there is also a gender angle, in that more than two-third of economic migrants from India are male. So, the women are left behind to care for the children and the elderly, as is the social norm. This gender skew is not there for economic migrants from Sri Lanka and Philippines.

India is the world’s most populated country, with a paucity of high-quality jobs, and its per capita income is low. So, it is natural to expect it to be a leader in economic migration. Domestically too, one-third of the population are internal migrants in search of jobs and livelihoods. Much of the internal migration tends to be seasonal, circular and often intra-state too. International migration of Indians is a totally different matter. There is much more vulnerability, possibility of exploitation and discrimination, especially since the migrants are mostly in blue-collar work. It requires proactive intervention from our consular staff. India has also been advocating for a special WTO work permit system, which allows people to travel for work and not get treated as potential immigrants every time they stand in line for a visa. In these times of fierce anti-immigrant sentiment, it will take time to push for freer movement of economic migrants and service providers. Till then we can cherish the strong remittance earnings.

Dr Ajit Ranade is a noted Pune-based economist. Syndicate: The Billion Press (email: editor@thebillionpress.org)

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